BRICS Summit: Paving way for de-dollarisation and new trade system beyond SWIFT?

BRICS Summit: ongoing BRICS summit, from  October 22-24, 2024, in Kazan, Russia, is going to be remembered as first meeting after January expansion of this bloc. With over thirty countries, including NATO member Türkiye, voicing interest in joining bloc, summit is likely to take critical decisions that could see a redesign of international relations. key highlight of summit this time is to come up with an alternative to US dollar and an alternative to SWIFT payment settlement system.

What exactly is de-dollarisation? According to a JP Morgan research note, de-dollarisation entails a reduction in usage of dollars in global tre and financial transactions. In recent times, clamour for de-dollarisation has grown like never before. US dollar, which is used as a reserve currency by world, is losing its sheen. world has alrey been attempting to move away from dollar; Russia, which is second largest exporter of oil, is settling its transactions in local currencies.  Similarly, central banks across world are buying gold to diversify from dollar-centric financial system.

A few months back, Minister of External Affairs, S Jaishankar recently commented on a US think tank in which he said, “India has no malicious intent towards dollar”. He went a step ahe and clarified that India is not targeting US dollar and that de-dollarisation is not part of India’s economic policy. He did share his concern and said that US policies often complicate its tre with certain countries and refore India is seeking “workarounds” to deal with tre partners who lack dollars for transactions.

Now BRICS Pay, as launched by BRICS with support of Russia and China, is all about de-dollarisation and finding an alternative to SWIFT payment settlement system. According to reports, President of Russian Federation Council at official announcement of BRICS Pay said, “BRICS Pay is no longer just an idea, it is a concrete project that is rapidly vancing.”

Dollar still holds a dominant position in international payment system outside eurozone, it still constitutes 58 per cent of international payment outside eurozone.

US Panics to Stay in Game

In this scenario, US and its allies are reported to be on red alert. Republican presidential candidate, Donald Trump, has gone a step furr to threaten imposing a 100 per cent tariff on countries switching away from US dollar. Latest reports say US is rar intensely attempting to scuttle Kazan summit, where it is reportedly exerting pressure on invited nations to force some of m to back out or send low-level delegations.

India Important in BRICS Agenda

India is one of BRICS founding members, so country could make important contributions to debate about expansion and de-dollarisation. Since or BRICS members are alrey very interested in taking vantage of new economic opportunities without forfeiting ir relationship with U.S., Indian External Affairs Minister S. Jaishankar's latest remarks suggest why India remains cautious about a move it describes as de-dollarisation while maintaining its intention not to penalise dollar but to find alternatives in accommodating complications in tre.

Shift in Economic Power Internationally

As per available reports, BRICS has surpassed G7 in purchasing power parity scale. As more members join bloc, it is a signal that world is slowly drifting away from economic hegemony of United States towards anor superblock. Most importantly, entry of Türkiye into BRICS can become an opportunity for or NATO and EU members to join superblock. And refore, this can increase tension within Western alliances.

As BRICS summit is about to take place, all international onlookers will be keenly watching complexity of those interactions between powers. Decisions taken in Kazan could mean significant shifts globally in economic structures and forms of political alliances, especially in spirit of US dominance and emerging multipolarity.